Is the New Credit Card Consumer Protection Law Really Going to Help You with Money Management?

When you get your credit card statement or statements in the mail each month are there other things in the envelope besides just your bill? Perhaps there is also an advertisement or two stuffed in there with the statement. And maybe, just maybe there is something with a lot of fine print that is labeled as being “important information about changes to your account.” How many people do you suppose actually read all of this fine print? Well the banks issuing these credit cards are counting on this; but the cat is slowly getting out of the bag on their latest scheme!

For years credit card companies could make changes to cardholder agreements at their leisure. There were really no restrictions placed upon these companies by the federal government. But because it was such a competitive industry it would not have been in any credit card issuer’s best interest to make themselves less competitive by doing things like randomly raising interest rates. That was until the banking and credit meltdown.

So President Obama signed a bill into law called the Credit Card Accountability, Responsibility and Disclosure Act. This bill basically states that banks are restricted in the way that they can raise interest rates on fixed rate credit cards. That’s great news for credit card holders who are concerned about money management, right? It would be, except the law says nothing about credit cards that have variable rates.

And you guessed it: now these credit card companies are changing many of their cardholders’ accounts to variable interest rates instead of fixed interest rates! Some consumer advocates are going as far as calling this a bait and switch tactic too. While we may not all agree that it is this extreme, we can all recognize that these companies are changing these terms simply to sidestep the new law.

So, what can you do? Your best option is to pay off your variable rate credit cards, and try to obtain fixed rate credit cards. Debt settlement and debt consolidation plans are also a solid choice, if your credit cards are putting excessive strain on your finances. Make sure you pay attention to the tiny print in your next credit card statement, and don't get caught with a higher than usual interest rate!

How can it even be possible that a person who earned hundreds of millions of dollars during their career could end up under a mountain of debt? Well now that the news coverage over the grieving of Michael Jackson’s death has partially subsided, his enormous debt is starting to make the news. And some of the numbers being thrown around for this debt have been as high as $500 million dollars! So how did this all happen? Did he get really lousy budgeting advice? Or was it his copious lifestyle that was to blame?

Michael Jackson’s adult life could probably be summed up in two words: excessively lavish. So what kinds of things did he buy? Perhaps the easy way to answer that would be by asking what he didn’t buy! While we would all love to have our own private amusement park, Jackson actually did. And his sprawling home at Neverland Ranch was chock full of rare antiques. At one point he was even rumored to have owned the skeleton of Joseph Merrick otherwise known as the Elephant Man. This was a man who had no problem spending 40 or 50 million dollars in the span of just one year. That would be like spending $137,000 every single day for a year!

After his albums stopped selling like hot cakes in the late 80’s Jackson’s income dwindled. Fortunately for Jackson there were assets that he could still rely on. Where normal people would need to explore debt settlement options, Jackson instead used investments he had made as a means of leveraging. This put more cash in his hands. And as always the cash would not stay in his hands but instead would get spent supporting his lavish life style and spending sprees. The mountain of debt continued to grow until his death.

So what can we learn from this? Well for one thing, we should all keep our spending habits in check. This is as important as ever right now too because of our economic situation. It is always a good idea to have a plan, and manage your money properly. And a financial plan starts with having a budget. If you have not budgeted for something, don’t buy it! If you control your spending habits, your savings will take care of themselves.